Hungary's Wizz Air denies takeover talks

By bne IntelliNews July 10, 2014

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Hungarian low cost airline Wizz Air was forced on July 9 to deny reports it's in talks to sell a stake to Air France.

A spokesperson for Central Europe's largest budget air carrier insisted there was not any truth in earlier reports by Dutch online aviation news site Luchtvaartnieuws that it is discussing a deal with the French flag carrier. "Because of its success, Wizz Air receives unsolicited inquiries from time to time from interested potential investors," the statement made to said. "There are no such discussions currently underway."

Luchtvaartnieuws claimed that negotiations over a buyout between Air France and Wizz Air are in an advanced stage, according to industry speculation. Air France-KLM, which issued a profit-warning earlier this week, already owns a budget carrier, Transavia, which is operated as an independent airline within the group. However, Transavia is anchored in the Western European market; Wizz Air would offer it exposure to the quick growth in Central and Eastern Europe.

Indeed, Wizz Air has much-discussed plans to expand further in that direction, in a bid to tap the growing income in the region. However, on June 16, the company pulled out of a planned IPO for the second time in as many years. It had sought to raise €200m, with the bulk of the cash set to expand routes in CEE and further to the east.

The cancelled float came as other low-cost carriers such as Ryanair and Easyjet watched their share prices dropping sharply. Ireland-based Ryanair has fought a bitter fight with Wizz Air to fill the void left by the 2012 grounding of Hungarian national carrier Malev, grabbing extra slots in Budapest in order to expand regional coverage. The struggles of flag carriers in the Baltics, Poland and Czech Republic have only strengthened its hand in the region, and the company says it has a market share of 38% in CEE. 

The airline was quick to insist that the the cancelled IPO would not upset its chase for underserved markets with a growing appetite for flying. "The outlook for Wizz Air's business remains extremely positive," the company said. "We will continue to grow the business. New markets can be stimulated." 

However, the company also maintains that coming consolidation in the market means it needs to stand ready. It said as part of that preparation, it still wants to expand its fleet, from the current 50 or so planes to 82 by the end of 2017. "We expect more consolidation in the market. It is hard to say when and where but we expect consolidation and we want to be able to act," CEO Jozsef Varadi stated in June. 

Unnamed sources told Reuters at the time of the collapsed IPO that Wizz Air could soon take another stab at the float, although none was ready to offer an estimate of when that could happen. "It typically takes some time before launching another roadshow," one said.

That would be third time lucky. Wizz Air was originally due to list in summer 2013, but the sale was quietly put on the back burner. Sources at the time suggested the company may look for a strategic investor instead. 

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